Paying Our Climate Debt

Paying Our Climate Debt

by

Daphne Wysham

So we've
heard the inconvenient truth: climate change is a really big problem,
and we need to get serious about it. But what we haven't heard much
about is the cost and who will ensure that bill is paid. How much will
it cost us to slow down and stop climate change? What exactly is our
financial obligation to the poorer countries that have little or
nothing to do with causing the problem? And what institution will make
sure the money gets where it's intended to go?

The first two issues - commonly referred to as "mitigation" and
"adaptation" costs - are only recently being sketched out in any
detail. And the final issue - which institution handles the money once
it materializes - hasn't been seriously debated in any public way.
However, it's this last detail that's being taken up with a degree of
urgency by some governments and civil society groups gathering now in
Poznań, Poland, for the United Nations climate negotiations.

The amounts of money that must materialize in rather short order if
we are to handle the climate crisis are not small. One recent highly
publicized study, the 2006 Stern Review,
which was then revised upward in 2008, estimated that stabilization of
global warming gases at roughly 500-550 parts per million of carbon
dioxide would cost about 2% of gross domestic product annually, if done
over the next two decades. And 2% of GDP is roughly equivalent to $1.2
trillion per year. While daunting, this is a figure that gets us to an
atmospheric target that many leading scientists say isn't nearly
ambitious enough. For example, NASA's top scientist, Dr. James Hansen,
tells us we need to focus on reducing our carbon dioxide emissions even
further: to 350 parts per million.

But let's take the Stern target, and assume it's in fact $1.2
trillion per year that must be invested. This is less than the U.S.
government was able to mobilize in the past few months to bail out
financial firms. And it's over twice as much as the official budget for
the U.S. Pentagon in the 2009 fiscal year, at $515 billion.

Silver Linings

But there are several silver linings in this rather large number.
One is that much of this is money that would be invested anyway, at
home and abroad - in energy infrastructure, transportation,
agriculture, and other industries. The second is that the investment
will save us money in the form of energy savings. The third is that if
we don't invest this money, the cost of inaction is far higher. And
finally, while it is a large outlay of cash, making these investments
will not slow global GDP significantly. Recent studies by the
International Energy Agency, the Intergovernmental Panel on Climate
Change, and McKinsey & Co. (a management consulting firm) found
that shooting for a target of 450 parts per million of CO2 would slow
global GDP by maybe 0.1% per year.

The other cost, ("adaptation") is a burden borne largely by wealthy
countries to help poorer nations "adapt" to climate change. Here, cost
projections are radically uncertain. The UN Development Program
estimates the cost at around $86 billion. The World Bank estimates the
cost could be as high as $41 billion per year. Oxfam projects a cost of
$50 billion per year, but only if greenhouse gas emissions are
curtailed quickly.

Currently, there are no institutional structures in place that would
be up to the task of ensuring adequate financing for either mitigation
or adaptation. However, there's one institution that's ready and
willing to provide the service of managing the billions - if not
trillions - of dollars in adaptation and mitigation finance: the World
Bank. While garnering some support for this role by countries such as
the United States and the United Kingdom, it has run into opposition
from China, India, and other G-77 countries as well as a broad array of
civil society actors, who see in this new expanding role for the World
Bank a serious problem.

Why would they be opposed to the Bank taking on such a role? There
are a multiplicity of reasons, but the most central of objections seems
to come down to the issue of participatory planning and representative
governance. Long viewed as a bank that caters to its wealthy donors
more than to its targeted beneficiaries, the World Bank is eyed with
suspicion by many countries in the Global South. On climate change, it
has ignored its own 2004 Extractive Industries Review
recommendations, which called on the Bank to phase out all of its
support for fossil fuels by 2008 and rapidly increase the uptake of
renewable energy alternatives. Instead of listening to its own
advisors, the Bank continues to invest in fossil fuels, with its
investments in coal - the most carbon-intensive of fossil fuels -
rising by 256% just in the last year.

Carbon Transactions

The World Bank is also home to over a dozen carbon funds, and
garners a commission of roughly 13% on all of the transactions it
brokers. Some of these carbon credits are being applied on the very
coal burners it is helping to finance. And the Bank is positioning
itself as a lead player in the UN's Reduced Emissions from
Deforestation and Degradation (REDD), an initiative that aims to reduce
greenhouse gas emissions from deforestation in developing countries.
Yet indigenous peoples, who are largely responsible for preserving what
few forests remain, weren't consulted as the World Bank developed its
own REDD plans, while timber companies had a seat at the table.

And so civil society groups are now calling for the creation of a new Global Climate Fund,
one that would oversee "substantial, obligatory and automatic" funding
for mitigation, adaptation, and reducing emissions from deforestation
and degradation. They believe such an institution would best be
overseen by the UN, not the World Bank, because representative
governance will be key. They also believe such a fund must abide by
core UN agreements, such as the UN Universal Declaration of Human
Rights and the UN Declaration on the Rights of Indigenous Peoples.
Possible financing for this Global Climate Fund could include: taxes on
bunker fuels, aviation, fossil fuel exports, and other sources of
greenhouse-gas emissions; levies on gross national product and
historical responsibility; carbon debits - comparable to carbon credits
- charged to investors in international financial institutions and
export credit agencies for their contribution to greenhouse gas
emissions; auctions of national and international greenhouse gas
emissions permits, and currency transaction taxes.

While those in the developing world fully understand what's at stake
with a newly expanded role for the World Bank in managing climate
funds, alas, for most in the global North, the debate seems far removed
from any immediate concern of theirs. And yet, if we are to
sufficiently address this issue - with financial resources flowing
where they are needed most, and quickly - it must become crystal clear
to all of us, particularly in the North, why the World Bank isn't the
institution to make this happen. And while this clarity emerges, we
must take one more unlikely step and surrender a measure of oversight
and control over the revenue we owe the developing world, our "climate
debt," in order to allow it to be managed and overseen by those who
need it most.

Further

Lord, what would John Lennon have made of the Trump monster? Marking Thursday's 36th anniversary of Lennon's murder, Yoko Ono posted a plea for gun control, calling his death "a hollowing experience" and pleading, "Together, let's bring back America, the green land of Peace." With so many seeking solace in these ugly times, mourns one fan, "Oh John, you really should be here." Lennon conceded then, and likely would now, "Reality leaves a lot to the imagination."